British Pound holds onto intraday losses against strong USD following poor UK PMIs.

The GBP/USD pair experienced a slight decline, reaching new daily lows near 1.3215-1.3210 during early European trading. The overall market sentiment seems to be favoring bearish traders, indicating that the likely trajectory for spot prices is downward.

The British pound has become a fresh source of supply as the political situation in Britain worsens, particularly after Prime Minister Keir Starmer’s resignation, which comes amid increasing pressure from within the Labor Party. Moreover, disappointing preliminary PMI data from the UK has further added to the pound’s weakness, alongside ongoing strong buying of the US dollar.

S&P Global’s recent survey indicates a contraction in UK business activity for the second month in a row, with the headline PMI dropping to 49.4 from June’s 49.7 — the lowest it has been in 14 months. The downturn is largely attributed to difficulties in the services sector, where the PMI has plummeted to a 41-month low of 48.7, countering a rise in the manufacturing PMI, which reached a nearly two-year high of 53.6.

This is compounded by the lackluster UK consumer inflation data released last week, prompting traders to adjust their expectations regarding interest rate hikes from the Bank of England (BoE). Additionally, a peace agreement between the US and Iran has alleviated fears of an energy shock, reinforcing the belief that the BoE is likely to maintain its current interest rates for the foreseeable future—this environment should further undermine the pound and benefit GBP/USD bears.

At the same time, expectations for the Bank of England’s policy diverge significantly from the US Federal Reserve’s more aggressive stance, which may raise interest rates later this year if inflation remains elevated. This, combined with ongoing uncertainty regarding US-Iran relations, has driven the US dollar to its highest point since May 2025, further affirming a negative short-term outlook for the GBP/USD pair.